Regular readers may recall that most of my income these days comes from building statistical models for use by the military NASA. But I do a bit of telecom work too and I’d be interested in doing some political consulting. One thing that comes up now and then is the opportunity to do a project for a small company. It doesn’t happen often – small companies rarely realize someone can help them by running numbers.
This afternoon I met a very nice guy – the guy who printed out my wedding invitations. I never met him before since the Ex-GF took care of all of those details. Anyway, he’s been in business for 25 years, and seen the business change dramatically. (One detail of which I was unaware – a lot of the big printing jobs are outsourced to… the Netherlands?!?) As kind of a not-unrelated aside, he has a computer system that compiles all his invoices into a nice summary format, but he’d have to pay another $700 to buy the module that allows it all to be exported into Excel in non-summary format.
Anyway, I’m going to look over the summary information and decide what services I can offer him and make a proposal. His costs would be my fee plus $700 to buy the module.
My thought process… and I haven’t looked at the data carefully yet, nor had time to digest everything I’ve heard, plus I’m just thinking aloud so to speak (so to write)…
1. The big jobs get outsourced
2. In terms of medium sized and small jobs, he has one thing that differentiates him. A brand new piece of equipment ($80K) that does some nifty digital copying. Most other printers don’t have that equipment yet.
3. But I wonder how long item 2 will be true. Put another way… I’m not sure what he can do to differentiate himself, and competing on price is alone is never a good idea.
4. Its a mature industry… costs to consumers have dropped tremendously in the past five years.
5. He’s thinking of hiring a company to do some marketing for him.
So where does that leave a printer like the gentleman I met this afternoon? Well, my off-the-top-of-the-head thought is that perhaps I cannot help him by running numbers. I have little doubt I can build a nice interactive model for him that computes his costs to the penny for each project, computes demand elasticities, and proposes the best possible price to charge customers for any given job. I’ve done it before for other clients. But perhaps at this point what he needs is advice. Perhaps, as he joked, it is time to try to sell the business, and perhaps next week that will be the conclusion I will have reached when I call him with a proposal. (I.e., I would proopse that he not waste his money hiring me, but instead try to sell the business.)
But perhaps there is something that can be done to turn around the business. It occurs to me that while competing on price with other printers is a loser’s game, competing on price with people’s imagination might not be. Most people don’t realize how much prices have dropped for printing services – informing them of this might drive some business.
But what else is there? What should someone in his position do?